Comtec Solar Systems Group Limited — Interim / Quarterly Report 2014

Sep 18, 2014

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Interim Report 2014

Contents

Corporate Information	2
Financial Summary	4
Chairman Statement	5
Business Review	9
Financial Review	12
Corporate Governance and Other Information	18
Report on Review of Interim Condensed Consolidated Financial Statements	27
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income	28
Condensed Consolidated Statement of Financial Position	29
Condensed Consolidated Statement of Changes in Equity	31
Condensed Consolidated Statement of Cash Flows	32
Notes to the Condensed Consolidated Financial Statements	34
Definitions	63

Corporate Information

DIRECTORS

Executive Directors

Mr. John Zhang Mr. Chau Kwok Keung Mr. Shi Cheng Qi

Non-executive Director

Mr. Donald Huang

Independent non-executive Directors

Mr. Daniel DeWitt Martin Mr. Kang Sun Mr. Leung Ming Shu

COMPANY SECRETARY

Mr. Chau Kwok Keung (HKICPA, ACCA, CFA)

CORPORATE GOVERNANCE COMMITTEE

Mr. John Zhang (Chairman) Mr. Chau Kwok Keung Mr. Leung Ming Shu Mr. Donald Huang

SIGNIFICANT PAYMENTS COMMITTEE

Mr. John Zhang (Chairman) Mr. Chau Kwok Keung Mr. Donald Huang

REGISTERED OFFICE

Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

AUTHORISED REPRESENTATIVES

Mr. John Zhang Mr. Chau Kwok Keung

AUDIT COMMITTEE

Mr. Leung Ming Shu (Chairman) Mr. Daniel DeWitt Martin Mr. Kang Sun Mr. Donald Huang

NOMINATION COMMITTEE

Mr. John Zhang (Chairman) Mr. Daniel DeWitt Martin Mr. Kang Sun Mr. Donald Huang Mr. Leung Ming Shu

HEADQUARTER

16 Yuan Di Road Nanhui Industrial Zone Shanghai 201314 PRC

PRINCIPAL PLACE OF BUSINESS IN HONG KONG

Suite 28 35/F Central Plaza 18 Harbour Road Wanchai Hong Kong

COMPANY’S WEBSITE

www.comtecsolar.com

REMUNERATION COMMITTEE

Mr. Leung Ming Shu (Chairman) Mr. John Zhang Mr. Kang Sun Mr. Donald Huang Mr. Daniel DeWitt Martin

AUDITOR

Deloitte Touche Tohmatsu

02 Comtec Solar Systems Group Limited

Corporate Information

LEGAL ADVISERS AS TO HONG KONG LAW

Orrick, Herrington & Sutcliffe

PRINCIPAL BANKS

Agricultural Bank of China The Hongkong and Shanghai Banking Corporation Limited Hang Seng Bank Limited

CAYMAN ISLANDS PRINCIPAL SHARE

REGISTRAR AND TRANSFER OFFICE

Royal Bank of Canada Trust Company (Cayman) Limited 4th Floor, Royal Bank House 24 Shedden Road, George Town Grand Cayman KY1-1110 Cayman Islands

HONG KONG SHARE REGISTRAR

Computershare Hong Kong Investor Services Limited Shops 1712–1716, 17th Floor Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong

Interim Report 2014 03

Financial Summary

RESULTS

Turnover Profit (Loss) before interest expense and taxation Interest expense Profit (Loss) before taxation Taxation Profit (Loss) and total comprehensive income (expense) for the period, attributable to the owners of the Company ASSETS AND LIABILITIES Total assets Total liabilities Net assets

Six months ended 30 June 2014 2013 2012 2011 2010 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 520,449 471,000 456,242 574,736 429,062 12,913 (2,621) (95,066) 145,531 84,577 (9,798) (9,476) (23,077) (7,997) (3,799) 3,115 (12,097) (118,143) 137,534 80,778 (125) (25) (2,988) (35,910) (12,219) 2,990 (12,122) (121,131) 101,624 68,559 As at As at As at As at As at 30 June 31 December 31 December 31 December 31 December 2014 2013 2012 2011 2010 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Unaudited) (Audited) (Audited) (Audited) (Audited) 2,581,630 2,608,545 2,440,099 2,654,773 1,912,392 (976,032) (1,083,732) (975,413) (1,000,996) (401,049) 1,605,598 1,524,813 1,464,686 1,653,777 1,511,343

04 Comtec Solar Systems Group Limited

Chairman Statement

On behalf of Comtec Solar Systems Group Limited, I hereby present the unaudited interim results of the Group for the six months ended 30 June 2014. During the Period, uncertainties from international trade conflicts between China and overseas countries intensified. The international business environment for PRC-based solar manufacturing companies became more challenging. Our strategy to build production facilities in Malaysia enabled us to mitigate risks and costs in relation to such conflicts and any changes in trade policies. We are now one of the few PRC based solar companies with production facilities in overseas countries. It would strengthen our competitive advantages to yield new customers.

Here are some financial and business highlights for the Period:

• Revenue for the Period was approximately RMB520.4 million (corresponding period in 2013: RMB471.0 million);

• Gross profit for the Period was approximately RMB43.5 million (corresponding period in 2013: RMB40.5 million);

• Gross profit margin for the Period was approximately 8.3% (corresponding period in 2013: 8.6%);

• Net profit for the Period was approximately RMB3.0 million (corresponding period in 2013: net loss of RMB12.1 million);

• Adjusted net profit for the Period was approximately RMB8.9 million by excluding the other gains of approximately RMB9.5 million and the non-cash share-based payment expenses of approximately RMB15.4 million;

• Earnings per Share for the Period was approximately RMB0.2 cent (corresponding period in 2013: loss per Share of RMB1.0 cent);

• Wafer shipment for the Period was approximately 190.1 MW, representing an increase by approximately 5.8% from approximately 179.6 MW for the corresponding period in 2013; and

• The Group controlled net debt to equity ratio to be 3.1% as of 30 June 2014.

Interim Report 2014 05

Chairman Statement

Before our 300MW new facilities in Malaysia are fully ramp up and running, we achieved wafer shipment growth of approximately 5.8% from 179.6 MW for the corresponding period in 2013 to 190.1 MW for the Period. We continued to focus on our premium “Super Mono Wafers” which only have limited suppliers qualified by the major international customers in the market. Based on the feedback from our major customers, the high efficient solar cell with our “Super Mono Wafers” has reported to have over 25% conversion efficiency. We expect the product specifications and cost competitiveness of “Super Mono Wafers” would continue to improve in the coming few years. Our customers increasingly realize the benefits of buying high efficient solar wafers to improve their costs competitiveness and to achieve reliable product performance. It strengthens the demand and provides further business opportunities to our premium products.

During the Period, we continued to increase shipments to a reputable Japan-based customer. We also commenced shipment to Mission Solar Energy LLC (“Mission Solar”) under the long term agreement signed in December 2013. Our existing customers have indicated their plans to expand production capacities and we expect the demand from them would continue to increase. We are also committed to explore new customers. Credit to our proven abilities to manufacture more advanced and efficient products and our successful track record to complete qualification process with global leading solar cell manufacturers, we established strong reputations and marketing channels to attract new customers. We are in the process of qualification with two new customers headquartered in the United States. The more rigid and complicated requirements in the qualification process differentiates us in the market and strengthens the barrier to entry to our business.

Our top five customers in the Period contributed approximately 77.4% to our total revenues, compared to approximately 76.4% in the corresponding period last year. The sales to the largest customer in Philippines with the high quality “Super Mono Wafers” accounted for approximately 50.8% of our total revenues in the Period, as compared to approximately 61.1% in the corresponding period in 2013.

During the Period, we continued to execute our cost reduction strategy. We have achieved continuous cost saving from our improvements in technology, manufacturing process and conversion efficiency of our wafers. We expect to see further cost reductions in the coming quarters. The accumulated experiences from massive production of “Super Mono Wafers” as well as our strategic research and development cooperation with existing customers continue to drive down our production costs by technology advancements. After our 300MW facilities in Malaysia are fully ramp up and running, we expect our production cost would be further reduced. We would leverage our advantages in wafer technology to reduce cost without compromising quality and to generate value for our customers.

06 Comtec Solar Systems Group Limited

Chairman Statement

Given the current industry environment, it is clear that strict financial discipline is essential to success and we believe diligence in financial matters will separate the winners from the rest. On 4 April 2014, Fonty, Mr. John Zhang, the Company and Sky Villie Investments Limited, ASM Connaught House Fund LP and ASM Hudson River Fund, (“the Placees”) entered into a placing and subscription agreement pursuant to which the Placees agreed to purchase 59,541,985 Shares (“the Placing Shares”) from Fonty at the placing price of HK$1.31 per Share, and Fonty conditionally agreed to subscribe, and the Company agreed to allot and issue to Fonty for such number of subscription Shares which is equivalent to the number of the Placing Shares at the price of HK$1.31 per Share. The subscription price for the subscription represented a discount of 7.5% to the closing price of HK$1.42 per Share as stated in the Stock Exchange’s daily quotations sheet on 4 April 2014. The net placing price, after deduction of placing commission and all other fees and expenses, was HK$1.30 per Share. Approximately HK$77.0 million was raised from the subscription to fund any investment opportunities identified by the Group and as general working capital of the Group. Further details of these transactions are set out in the Company’s announcement dated 4 April 2014. We would implement a balanced financing plan to support the operation of our solar wafer business.

Coupled with our disciplined financial and operational initiatives, we maintained a solid financial position during the Period. We controlled the net debt to equity ratio as 3.1% as of 30 June 2014. Our solid financial positions enable us to pursue growth opportunities. We believe we are well positioned to maximize our benefits from the industry consolidation process.

In June 2014, we commenced the trial production in our Malaysia plant. In addition, we are currently working with our existing customers to qualify our new production facilities. We expect it would be completed in the second half of 2014. The Group plans to further expand production capacity in Malaysia from 300 MW to 600 MW in 2015. It would enable us to further lower the production costs and to increase the scale of operation. We expect the demand on “Super Mono Wafers” would continue to increase strongly in coming few years. We are in the process of evaluating various opportunities for purchasing low-cost equipments for our expansion which can maximize our advantages from the industry consolidation process.

During the last few years, the costs of solar power keep decreasing. It has accelerated the industry’s progress towards grid-parity and the installation of PV systems becoming increasingly affordable. The costs of solar power are now below user-paid rates for increasing number of markets and user categories. We believe that lower PV system costs will drive the adoption of solar power and long-term market growth. In 2014, we are optimistic that solar PV demand would continue to be strong and expect China, Japan and the United States as well as the Asia Pacific region and the Middle East to be key drivers of this increasing demand. The China market is expected to keep growing following the National Energy Administration’s reiteration of strong support for the solar industry and solar power generation, and particularly distributed power generation. We are also excited to see the increasing commitments on distributed/rooftop projects from various markets which would be more demanding for product quality and reliability. With the expected rapid growth of the distributed generation market, we are confident that the Group will benefit from this trend of increasing demand for high-efficiency products.

Interim Report 2014 07

Chairman Statement

With our advanced technological capabilities and proven track records, we are confident to capture enormous opportunities in solar industry and to drive continued and healthy growth for the Group in future.

On behalf of the Board, I would like to express my sincere gratitude to our Shareholders and business partners for their support and trust in us, and also to our management and employees for their hard work. We look forward to creating greater value and return for our Shareholders.

John Zhang Chairman

Shanghai, the People’s Republic of China, 29 August 2014

08 Comtec Solar Systems Group Limited

Business Review

During the Period, uncertainties from international trade conflicts between China and overseas countries intensified. The international business environment for PRC-based solar manufacturing companies became more challenging. Our strategy to build production facilities in Malaysia enabled us to mitigate risks and costs in relation to these conflicts and any changes in trade policies. We are now one of the few PRC based solar companies with production facilities in overseas countries. It would strengthen our competitive advantages to yield new customers.

Before our 300MW new facilities in Malaysia are fully ramp up and running, we achieved wafer shipment growth of approximately 5.8% from 179.6MW for the corresponding period in 2013 to 190.1 MW for the Period. We continued to focus on our premium “Super Mono Wafers” which only have limited suppliers qualified by the major international customers in the market. Based on the feedback from our major customers, the high efficient solar cell with our “Super Mono Wafers” has reported to have over 25% conversion efficiency. We expect the product specifications and cost competitiveness of “Super Mono Wafers” would continue to improve in the coming few years. Our customers increasingly realize the benefits of buying high efficient solar wafers to improve their costs competitiveness and to achieve reliable product performance. It strengthens the demand on and provides further business opportunities to our premium products.

During the Period, we continued to increase shipments to a reputable Japan-based customer. We also commenced shipment to Mission Solar under the long term agreement signed in December 2013. Our existing customers have indicated their plans to expand production capacities and we expect the demand from them would continue to increase. We are also committed to explore new customers. Credit to our proven abilities to manufacture more advanced and efficient products and our successful track record to complete qualification process with global leading solar cell manufacturers, we established strong reputations and marketing channels to attract new customers. We are in the process of qualification with 2 new customers headquartered in the United States. The more rigid and complicated requirements in the qualification process differentiates us in the market and strengthens the barrier to entry to our business.

Our top five customers in the Period contributed approximately 77.4% to our total revenues, compared to approximately 76.4% in the corresponding period last year. The sales to the largest customer in Philippines with the high quality “Super Mono Wafers” accounted for approximately 50.8% of our total revenues in the Period, as compared to approximately 61.1% in the corresponding period in 2013.

Interim Report 2014 09

Business Review

During the Period, we continued to execute our cost reduction strategy. We have achieved continuous cost saving from our improvements in technology, manufacturing process and conversion efficiency of our wafers. We expect to see further cost reductions in the coming quarters. The accumulated experiences from massive production of “Super Mono Wafers” as well as our strategic research and development cooperation with existing customers continued to drive down our production costs by technology advancements. After our 300MW facilities in Malaysia are fully ramp up and running, we expect our production cost would be further reduced. We would leverage our advantages in wafer technology to reduce cost without compromising quality and to generate value for our customers.

Given the current industry environment, it is clear that strict financial discipline is essential to success and we believe diligence in financial matters will separate the winners from the rest. On 4 April 2014, Fonty, Mr. John Zhang, the Company and Sky Villie Investments Limited, ASM Connaught House Fund LP and ASM Hudson River Fund, (“the Placees”) entered into a placing and subscription agreement pursuant to which the Placees agreed to purchase 59,541,985 Shares (“the Placing Shares”) from Fonty at the placing price of HK$1.31 per Share, and Fonty conditionally agreed to subscribe, and the Company agreed to allot and issue to Fonty for such number of subscription Shares which is equivalent to the number of the Placing Shares at the price of HK$1.31 per Share. The subscription price for the subscription represented a discount of 7.5% to the closing price of HK$1.42 per Share as stated in the Stock Exchange’s daily quotations sheet on 4 April 2014. The net placing price, after deduction of placing commission and all other fees and expenses, was HK$1.30 per Share. Approximately HK$77.0 million was raised from the subscription to fund any investment opportunities identified by the Group and as general working capital of the Group. Further details of these transactions are set out in the Company’s announcement dated 4 April 2014. We would implement a balanced financing plan to support the operation of our solar wafer business.

Coupled with our disciplined financial and operational initiatives, we maintained a solid financial position during the Period. We controlled the net debt to equity ratio as 3.1% as of 30 June 2014. Our solid financial positions enabled us to pursue growth opportunities. We believe we are well positioned to maximize our benefits from the industry consolidation process.

In June 2014, we commenced the trial production in our Malaysia plant. We are currently working with our existing customers to qualify our new production facilities. We expect it would be completed in the second half of 2014. The Group plans to further expand production capacity in Malaysia from 300 MW to 600 MW in 2015. It would enable us to lower the production costs and to increase the scale of operation. We expect the demand on “Super Mono Wafers” would continue to increase strongly in coming few years. We are in the process of evaluating various opportunities for purchasing low-cost equipments for our expansion which can maximize our advantages from the industry consolidation process.

10 Comtec Solar Systems Group Limited

Business Review

During the last few years, the costs of solar power kept decreasing. It has accelerated the industry’s progress towards grid-parity and the installation of PV systems becoming increasingly affordable. The costs of solar power are now below user-paid rates for increasing number of markets and user categories. We believe that lower PV system costs will drive the adoption of solar power and long-term market growth. In 2014, we are optimistic that solar PV demand would continue to be strong and expect China, Japan and the United States as well as the Asia Pacific region and the Middle East to be key drivers of this increasing demand. The China market is expected to keep growing following the National Energy Administration’s reiteration of strong support for the solar industry and solar power generation, and particularly distributed power generation. We are also excited to see the increasing commitments on distributed/rooftop projects from various markets which would be more demanding for product quality and reliability. With expected rapid growth of the distributed generation market, we are confident that the Group will benefit from this trend of increasing demand for high-efficiency products.

With our advanced technological capabilities and proven track records, we are confident to capture enormous opportunities in solar industry and to drive continued and healthy growth for the Group in future.

Interim Report 2014 11

Financial Review

REVENUE

Revenue increased by RMB49.4 million, or 10.5%, from RMB471.0 million for the corresponding period in 2013 to RMB520.4 million for the Period, primarily as a result of the growth in our wafer sales volume and improved re-sales prices of polysilicons, but partially offset by decrease in average wafer selling price. Due to the increase in customer demand for our high quality monocrystalline solar wafers, our wafers shipment volume increased by 5.8% from 179.6 MW for the corresponding period in 2013 to 190.1 MW for the Period.

Sales of 125 mm by 125 mm monocrystalline solar wafers

Revenue from sales of 125 mm by 125 mm monocrystalline solar wafers increased by RMB26.3 million, or 9.5%, from RMB276.5 million for the corresponding period in 2013 to RMB302.8 million for the Period, primarily due to the increase in our sales volume by 16.4% from 142.5 MW for the corresponding period in 2013 to 165.9 MW for the Period, which was partially offset by the decrease in average selling price of approximately 5.3% from RMB1.9 per watt in the corresponding period in 2013 to RMB1.8 per watt for the Period.

Sales of 156 mm by 156 mm monocrystalline solar wafers

Revenue from sales of 156 mm by 156 mm monocrystalline solar wafers increased by RMB4.2 million, or 79.2%, from RMB5.3 million for the corresponding period in 2013 to RMB9.5 million for the Period, primarily as a result of an increase of sales volume by 113.8% from 2.9 MW for the corresponding period in 2013 to 6.2 MW for the Period which was partially offset by the decrease in average selling price of approximately 16.7% from RMB1.8 per watt in the corresponding period in 2013 to RMB1.5 per watt for the Period.

Processing services of 125 mm by 125 mm monocrystalline solar wafers

Revenue from processing fees on 125 mm by 125 mm monocrystalline solar wafers was RMB4.8 million, decreased by RMB15.9 million or approximately 76.8% from RMB20.7 million for the corresponding period in 2013, primarily due to decrease in scale for the processing services during the Period.

Others

Other revenue was mainly generated from sales of polysilicon and ingots which increased by RMB34.8 or 20.7%, from RMB168.5 million for the corresponding period in 2013 to RMB203.3 million for the Period. It was mainly attributable to the increase of re-sale price of polysilicon from RMB107.1 per kg for the corresponding period in 2013 to RMB132.4 per kg for the Period.

Revenue by geographical market

In relation to the geographical analysis of our revenue, approximately 50.8% (2013: 61.1%) of total revenue for the Period was generated from our sales to Philippines. The remaining portion was mainly generated from our sales to PRC-based and Japan-based customers.

12 Comtec Solar Systems Group Limited

Financial Review

COST OF SALES

Cost of sales increased by RMB46.5 million, or 10.8%, from RMB430.5 million for the corresponding period in 2013 to RMB477.0 million for the Period, primarily as a result of the increase in purchase cost of polysilicon and wafer shipment volumes.

GROSS PROFIT

Gross profit increased by RMB3.0 million, or 7.3%, from RMB40.5 million for the corresponding period in 2013 to RMB43.5 million for the Period, primarily due to the aforementioned factors.

OTHER INCOME

Other income during the Period was approximately RMB2.9 million which was close to the amount incurred in corresponding period in 2013 and mainly represented bank interest income.

OTHER GAINS AND LOSSES

Other gains were approximately RMB9.5 million during the Period, turnarounded from other losses of RMB19.2 millions for the corresponding period in 2013. It was mainly related to the fair value changes of the outstanding warrants of the Company.

DISTRIBUTION AND SELLING ExPENSES

Distribution and selling expenses increased by RMB1.8 million, or 39.4%, from RMB4.7 million for the corresponding period in 2013 to RMB6.5 million during the Period, primarily due to the increase in export sales during the Period.

ADMINISTRATIVE AND GENERAL ExPENSES

Administrative and general expenses increased by RMB14.2 million, or 63.9%, from RMB22.2 million for the corresponding period in 2013 to RMB36.4 million for the Period, which was mainly due to the stock compensation expenses incurred for the share options newly grant during the Period.

INTEREST ExPENSES

Interest expenses increased by RMB0.3 million from RMB9.5 million for the corresponding period in 2013 to RMB9.8 million for the Period.

PROFIT (LOSS) BEFORE TAxATION

Profit before taxation was approximately RMB3.1 million for the Period, turnarounded from the loss before taxation of RMB12.1 million for the corresponding period in 2013, due to the aforementioned factors.

Interim Report 2014 13

Financial Review

TAxATION

The Group did not incur significant tax expenses in the Period and corresponding period in 2013 since no assessable profits were derived or tax losses were incurred from the Group entities.

PROFIT (LOSS) FOR THE PERIOD

The Group recorded a profit of RMB3.0 million during the Period, turnarounded from the loss of RMB12.1 million for the corresponding period in 2013, due to the aforementioned factors. Accordingly, the Group recorded a net profit margin of 0.6% for the Period, turnarounded from the net loss margin of 2.6% for the corresponding period in 2013.

INTERIM DIVIDEND

The Board resolved not to declare an interim dividend for the Period (six months ended 30 June 2013: nil).

INVENTORY TURNOVER DAYS

There was an increase in inventory balance of 2.1% from RMB383.6 million as at 31 December 2013 to RMB391.7 million as at 30 June 2014, which was mainly due to the increase in our work-in-progress in order to support the increase in our shipment volume and our substantial increase in overseas sales which would require longer transportation lead time and higher inventory level to ensure reliable delivery performance. The inventory turnover days as at 30 June 2014 totaled 149 days (31 December 2013: 162 days).

TRADE RECEIVABLE TURNOVER DAYS

The trade receivable turnover days as at 30 June 2014 totaled 47 days (31 December 2013: 68 days). For the Period, the Group continued to focus on “Super Mono Wafers” which were mainly sold to overseas customers. The credit period to overseas customers is approximately 60 days. The Group normally grants a credit period of 30 to 90 days to other customers. The average receivable turnover days were approximately 47 days which was within the credit periods of the Group grants to its customers.

TRADE PAYABLE TURNOVER DAYS

The trade payable turnover days as at 30 June 2014 totaled 45 days (31 December 2013: 118 days). The decrease in turnover days was mainly due to the market environments and payment terms of our purchase in the Period.

14 Comtec Solar Systems Group Limited

Financial Review

LIQUIDITY AND FINANCIAL RESOURCES

The Group’s principal sources of working capital included cash flow from operating activities, bank borrowings and the proceeds from share placing. As at 30 June 2014, the Group’s current ratio (current assets divided by current liabilities) was 1.7 (31 December 2013: 1.5) and it was in a net debt position of approximately RMB50.2 million (31 December 2013: net cash of approximately RMB4.0 million). The Group controlled net debt to equity ratio to be 3.1% as of 30 June 2014. The Group’s financial position remained healthy during the Period. As at 30 June 2014, the Group was in a net debt position of RMB50.2 million (31 December 2013: net cash of approximately RMB4.0 million) which included cash and cash equivalent, note receivables endorsed by banks, bonds, other financial assets and pledged bank deposits of RMB441.8 million (31 December 2013: RMB448.0 million), short-term bank loans of RMB486.5 million (31 December 2013: RMB436.1 million) and long-term bank loans of RMB5.5 million (31 December 2013: RMB7.9 million).

On 4 April 2014, Fonty, Mr. John Zhang, the Company and Sky Villie Investments Limited, ASM Connaught House Fund LP and ASM Hudson River Fund, (“the Placees”) entered into a placing and subscription agreement pursuant to which the Placees agreed to purchase 59,541,985 Shares from Fonty at the placing price of HK$1.31 per Share, and Fonty conditionally agreed to subscribe, and the Company agreed to allot and issue to Fonty for such number of subscription Shares which is equivalent to the of the Placing Shares at the subscription price of HK$1.31 per Share. The subscription price for the subscription represented a discount of 7.5% to the closing price of HK$1.42 per Share as stated in the Stock Exchange’s daily quotations sheet on 4 April 2014. The net placing price, after deduction of placing commission and all other fees and expenses, was HK$1.30 per Share. Approximately HK$77.0 million was raised from the subscription to fund any investment opportunities identified by the Group and as general working capital of the Group. Further details of these transactions are set out in the Company’s announcement dated 4 April 2014. We would implement a balanced financing plan to support the operation of our solar wafer business.

CAPITAL COMMITMENTS

As at 30 June 2014, the Group had capital commitments of approximately RMB225.7 million (31 December 2013: RMB119.6 million). The increase is mainly due to the proposed second phase manufacturing capacity expansion of the Group in Malaysia.

CONTINGENT LIABILITIES

As at 30 June 2014, there was no material contingent liability (31 December 2013: Nil).

RELATED PARTY TRANSACTIONS

Other than remuneration that the Group paid to the Directors and key management, the Group did not have any related party transactions for the Period.

Interim Report 2014 15

Financial Review

CHARGES ON GROUP ASSETS

As at 30 June 2014, other than the restricted cash of approximately RMB171.0 million (31 December 2013: RMB1.0 million), the Group pledged its buildings and prepaid lease payments having net book values of approximately RMB85.2 million (31 December 2013: RMB87.7 million) and approximately RMB14.1 million (31 December 2013: RMB14.2 million), respectively, to banks to secure banking facilities granted to the Group.

Save as disclosed above, as at 30 June 2014, no other assets of the Group were under charge to any financial institutions.

ACQUISITION OF SUBSIDIARY

No subsidiary of the Company was acquired during the Period.

DISPOSAL OF SUBSIDIARY

No subsidiary of the Company was disposed during the Period.

USE OF PROCEEDS

Apart from the capital raising activity mentioned below, the Company has not conducted any equity fund raising activities in the past 12 months from the date of this announcement.

			Intended use of
Date of initial			net proceeds
Announcement	Capital raising activity	Use of Net proceeds	not yet utilised
4 April 2014	Placing of 59,541,985	It was expected that the net proceeds	Approximately
	Shares at the placing	from the subscription would be	HK$77 million
	price of HK$1.31 per	approximately HK$77 million and the
	Share (net price equals	Directors intended to use the net
	to HK$1.3 per Share)	proceeds for any investment
		opportunity to be identified by the
		Group and as general working capital
		of the Group

HUMAN RESOURCES

As at 30 June 2014, the Group had 875 (31 December 2013: 864) employees. The remuneration of the existing employee includes basic salaries, discretionary bonuses and social security contributions. Pay levels of the employees are commensurate with their responsibilities, performance and contribution.

16 Comtec Solar Systems Group Limited

Financial Review

DETAILS OF THE FUTURE INVESTMENT PLANS FOR MATERIAL INVESTMENT

The Group is planning to further expand production capacity in Malaysia of approximately 300MW which would enable the Group to lower production costs and to increase the scale of operation. We expect to complete the expansion in 2015. Once completed, we would have total production capacity of around 600 MW in our Malaysia facilities. We are still in the process of evaluating various opportunities for purchasing low costs equipments for our expansion in Malaysia. Due to the rapid changing market environment, the Group may adjust the expansion plan according to the market environment. It would enable the Group to maintain flexibilities throughout the expansion process. We believe this strategy would enable the Group to maximize its advantages from the industry consolidation process.

ExPOSURE TO FLUCTUATIONS IN ExCHANGE RATES AND ANY RELATED HEDGES

The Group recognised net exchange losses of approximately RMB3.2 million, which mainly arose from monetary assets and liabilities of the group entities denominated in foreign currencies. Although the Group entered into foreign currency forward contracts, the Group currently does not have a foreign currency hedging policy but the management monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arise.

Interim Report 2014 17

Corporate Governance and Other Information

CORPORATE GOVERNANCE CODE

The Company is committed to maintaining high standards of corporate governance in the interests of the Shareholders. Except for the deviation from code provision A.2.1 of the Corporate Governance Code as disclosed below, during Period, the Company has complied with the Corporate Governance Code.

Under provision A.2.1 of the Corporate Governance Code, the roles of the chairman and chief executive officer should be separate and should not be performed by the same individual. The Group does not at present separate the roles of the chairman and chief executive officer. Mr. John Zhang is the chairman and chief executive officer of the Group. He has extensive experience in solar wafer industry and is responsible for the overall corporate strategies, planning and business management of the Group. The Board considers that vesting the roles of chairman and chief executive officer in the same individual is beneficial to the business prospects and management of the Group. The balance of power and authorities is ensured by the operation of the Board and the senior management, which comprise experienced and high caliber individuals. The Board currently comprises three executive Directors, two non-executive Directors and three independent non-executive Directors and has a strong independence element in its composition.

CHANGES IN DIRECTORS’ INFORMATION

Pursuant to Rule 13.51B(1) of the Listing Rules, the Company advises that (1) Mr. Chau Kwok Keung was appointed as an independent non-executive director and the chairman of the audit committee of Qingdao Port International Co., Ltd., a listed company on the Stock Exchange in May 2014 (stock code: 6198).

MODEL CODE

The Company has also adopted the Model Code set out in Appendix 10 of the Listing Rules as its code of conduct regarding securities transactions by the Directors. Having made specific enquiry with all Directors of the Company, all Directors confirmed that they have complied with the required standard set out in the Model Code and its code of conduct regarding directors’ securities transactions throughout the Period.

REVIEW OF INTERIM FINANCIAL STATEMENTS

Disclosure of financial information in this report complies with Appendix 16 of the Listing Rules. The audit committee of the Company has held meetings to discuss the internal controls and financial reporting matters of the Company, including the review of the unaudited interim results and the unaudited condensed consolidated interim financial statements for the Period.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company’s listed securities during the Period.

18 Comtec Solar Systems Group Limited

Corporate Governance and Other Information

SUFFICIENCY OF PUBLIC FLOAT

Based on the information that is publicly available to the Company and within the knowledge of the Directors as at the date of this report, the Company has maintained the prescribed public float of not less than 25% of the Company’s issued shares as required under the Listing Rules during the Period.

DISCLOSURE OF INTERESTS

Directors’ and Chief Executive’s Interests and Short Positions in Shares, Underlying Shares and Debentures

As at 30 June 2014, the Directors and the chief executive of the Company and their respective associates had the following interests or short positions in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which have been notified to the Company and the Hong Kong Stock Exchange pursuant to Division 7 and 8 of Part XV of the SFO, including interests and short positions which the Directors and the chief executive of the Company are taken and deemed to have under such provisions of the SFO, or which are required to be and are recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code:

Long Positions in the Company

			Approximate
			percentage of
			interest in
		Number of	the issued
		shares	share capital of
Name of Director	Nature of interest	interested	the Company
Mr. John Zhang1	Beneficial owner, beneficiary of a trust,	628,513,550	45.17%
	interest in a controlled corporation,
	interest of children under 18
Mr. Chau Kwok Keung2	Beneficial owner	13,228,000	0.95%
Mr. Shi Cheng Qi3	Beneficial owner	300,000	0.022%
Mr. Kang Sun4	Beneficial owner	549,574	0.039%
Mr. Daniel DeWitt Martin5	Beneficial owner	499,659	0.036%
Mr. Leung Ming Shu6	Beneficial owner	362,787	0.026%

Interim Report 2014 19

Corporate Governance and Other Information

Notes:

• (1) Fonty, which is 100% beneficially owned by Mr. Zhang, held 575,683,844 Shares. For the purposes of the SFO, Mr. Zhang is also deemed to be interested in 47,829,706 Shares which are beneficially owned by Mr. Alan Zhang, Mr. Zhang’s child under the age of 18, as beneficiary of Zhang Trusts For Descendants, which is an irrevocable trust set up by Mr. Zhang for the benefit of his descendants and of which J.P. Morgan Trust Company of Delaware is the trustee. For the purpose of the SFO, Mr. Zhang is also deemed to be interested in 5,000,000 underlying Shares by virtue of share options granted to him to subscribe for 5,000,000 Shares under the Company’s Share Option Scheme on 28 June 2012.

• (2) The Shares in which Mr. Chau Kwok Keung is deemed to be interested represent 13,228,000 Shares which may be issued to him upon the exercise of the Share Options (as defined below) granted to him on 28 June 2012 and on 31 March 2014 under the Share Option Scheme (as defined below).

• (3) The 300,000 Shares in which Mr. Shi Cheng Qi is deemed to be interested represent 300,000 Shares which may be issued to him upon the exercise of the Share Options granted to him on 24 May 2010 under the Share Option Scheme.

• (4) The 549,574 Shares in which Mr. Kang Sun is deemed to be interested represent 549,574 Shares which may be issued to him upon the exercise of the Pre-IPO Share Options (as defined below) granted to him on 3 August 2009 and 2 October 2009 under the Pre-IPO Share Option Scheme and the Share Options (as defined below) granted to him on 27 December 2012 under the Share Option Scheme.

• (5) The 499,659 Shares in which Mr. Daniel DeWitt Martin is deemed to be interested represent 499,659 Shares which may be issued to him upon the exercise of the Pre-IPO Share Options (as defined below) granted to him on 3 August 2009 and 2 October 2009 under the Pre-IPO Share Option Scheme and the Share Options (as defined below) granted to him on 27 December 2012 under the Share Option Scheme.

• (6) The 362,787 Mr. Leung Ming Shu is deemed to be interested represent 362,787 Shares which may be issued to him upon the exercise of the Pre-IPO Share Options (as defined below) granted to him on 3 August 2009 and 2 October 2009 under the Pre-IPO Share Option Scheme and the Share Options (as defined below) granted to him on 27 December 2012 under the Share Option Scheme.

Save as disclosed above, as at 30 June 2014, none of the Directors or the chief executive of the Company had or was deemed to have any interests or short position in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO), which had been recorded in the register maintained by the Company pursuant to section 352 of the SFO or which had been notified to the Company and the Stock Exchange pursuant to the Model Code.

At no time was the Company, its holding company, or any of its subsidiaries a party to any arrangements to enable the Directors and the chief executive of the Company (including their spouse and children under 18 years of age) to hold any interest or short positions in the shares, underlying shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO).

20 Comtec Solar Systems Group Limited

Corporate Governance and Other Information

SUBSTANTIAL SHAREHOLDERS’ INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES

So far as is known to any Director or chief executive of the Company, as at 30 June 2014, the persons or corporations (other than Director or chief executive of the Company) who had interest or short positions in the shares and underlying shares of the Company which were required to be disclosed to the Company under the provisions of Division 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept under section 336 of the SFO were as follows:

			Approximate
			percentage of
			interest in
		Number of	the issued
		shares	share capital of
Name of Shareholders	Nature of Interest	interested	the Company
Mr. John Zhang1	Beneficial owner, beneficiary of a trust,	628,513,550	45.17%
	interest in a controlled corporation,
	interest of children under 18
Fonty Holdings Limited	Beneficial owner	575,683,844	41.37%
Ms. Carrie Wang2	Interest of spouse	628,513,550	45.17%

Notes:

• (1) Fonty, which is 100% beneficially owned by Mr. Zhang, held 575,683,844 Shares. For the purposes of the SFO, Mr. Zhang is also deemed to be interested in 47,829,706 Shares which are beneficially owned by Mr. Alan Zhang, Mr. Zhang’s child under the age of 18, as beneficiary of Zhang Trusts For Descendants, which is an irrevocable trust set up by Mr. Zhang for the benefit of his descendants and of which J.P. Morgan Trust Company of Delaware is the trustee. For the purpose of the SFO, Mr. Zhang is also deemed to be interested in 5,000,000 underlying Shares by virtue of share options granted to him to subscribe for 5,000,000 Shares under the Company’s Share Option Scheme on 28 June 2012.

• (2) Ms. Caries Wang is the spouse of Mr. John Zhang, therefore, pursuant to the SFO, she is deemed to be interested in all the Shares in which Mr. John Zhang is interested.

Save as disclosed above, as at 30 June 2014, the Directors and the chief executive of the Company are not aware of any other person or corporation having an interest or short position in the shares and underlying shares of the Company which would require to be disclosed to the Company under the provisions of Division 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO.

Interim Report 2014 21

Corporate Governance and Other Information

SHARE OPTION SCHEMES

Pre-IPO Share Option Scheme

The Company has adopted a share option scheme on 2 June 2008 (the “Pre-IPO Share Option Scheme”) for the purpose of giving its employees an opportunity to have a personal stake in the Company and helping motivate its employees to optimize their performance and efficiency, and retaining its employees whose contributions are important to the long-term growth and profitability of the Group. Options to subscribe for an aggregate of 574,020 Shares (the “Underlying Shares”) were granted to three independent non-executive Directors on 3 August 2009 and 2 October 2009, in respect of 230,000 Underlying Shares and 344,020 Underlying Shares, respectively. The exercise price per Share is HK$2.51, which is at a 19.5% premium to the final offer price of the Company’s Shares in the initial public offering of the Company. No further options would be granted under the Pre-IPO Share Option Scheme on or after 30 October 2009 (the “Listing Date”), being the date on which dealings in the Shares first commenced on the Stock Exchange.

All options granted under the Pre-IPO Share Option Scheme (the “Pre-IPO Share Options”) can only be exercised in the following manner: (a) Shares representing 1/12th of the Shares which may be issued upon the exercise of options granted under the Pre-IPO Share Option Scheme shall vest on 1 November 2009; (b) from 1 November 2009 onwards, the remaining 11/12th of the Underlying Shares shall vest in equal quarterly instalments of 1/12th of the Underlying Shares at the end of each three-month period subject to continued employment with the Company during that period and all other terms and conditions as described in the Pre-IPO Share Option Scheme; and (c) all outstanding Pre-IPO Share Options shall lapse on the date falling 10 years from the offer date of the Pre-IPO Share Options.

Details of the exercise of the share options granted under the Pre-IPO Share Option Scheme as at 30 June 2014 are as follows:

Category of participants Date of Grant(3) Exercise price per Share Director Kang Sun 3 August 2009 HK$2.51 Daniel DeWitt Martin 3 August 2009 HK$2.51 Leung Ming Shu 3 August 2009 HK$2.51 Total	Balance as at 1 January 2014 Exercised during the Period Balance as at 30 June 2014 249,574 – 249,574 199,659 – 199,659 62,787 – 62,787
	512,020 – 512,020

There was no exercise, lapse or cancel of any Pre-IPO Share Options during the Period.

22 Comtec Solar Systems Group Limited

Corporate Governance and Other Information

SHARE OPTION SCHEME

The Company has adopted the Share Option Scheme on 16 September 2013 for the purpose of give the eligible persons an opportunity to have a personal stake in the Company and help motivate them to optimise their future performance and efficiency to the Group and/or to reward them for their past contributions, to attract and retain or otherwise maintain on-going relationships with such eligible persons who are significant to and/or whose contributions are or will be beneficial to the performance, growth or success of the Group, and additionally in the case of Executives (as defined below), to enable the Group to attract and retain individuals with experience and ability and/or to reward them for their past contributions.

The maximum number of Share which may be issued upon exercise of all options to be granted under the Share Option Scheme and any other schemes of the Group shall not in aggregate exceed 10% of the Shares in issued as at the Listing Date, that is, 100,000,000 Shares. No option may be granted to any participant of the Share Option Scheme such that the total number of Shares issued and to be issued upon exercise of the options granted and to be granted to that person in any 12-month period up to the date of the latest grant exceeds 1% of the Company’s issued share capital from time to time.

An option may be exercised in accordance with the terms of the Share Option scheme at any time during a period as determined by the Board and not exceeding 10 years from the date of the grant. There is no minimum period for which an option must be held before it can be exercised. Participants of the Share Option Scheme are required to pay the Company HK$1.0 upon acceptance of the grant on or before the 28 days after the offer date. The exercise price of the options is determined by the Board in its absolute discretion and shall not be less than whichever is the highest of:

• (a) the nominal value of a Share;

• (b) the closing price of a Share as stated in the Hong Kong Stock Exchange’s daily quotations sheets on the offer date; and

• (c) the average closing price of a Share as stated in the Hong Kong Stock Exchange’s daily quotation sheets for the five Business Days immediately preceding the offer date.

The Share Option Scheme shall be valid and effective for a period of 10 years from the Listing Date, after which no further options will be granted or offered.

During the Period, no share options (the “Share Options”) to subscribe for the ordinary Shares each in the share capital of the Company were granted, subject to acceptance of the grantees, under the Share Option Scheme.

Interim Report 2014 23

Corporate Governance and Other Information

Details of the Share Opitons exercised under the Share Option Scheme as at 30 June 2014 are as follows:

Grantee Date of grant Exercise price per Share Director Mr. Chau Kwok Keung 31 March 2014 HK$1.386 Other participants in 31 March 2014 HK$1.386 aggregate Other participants in 30 September 2013 HK$1.870 aggregate Director Mr. Kang Sun 27 December 2012 HK$1.262 Mr. Daniel DeWitt Martin 27 December 2012 HK$1.262 Mr. Leung Ming Shu 27 December 2012 HK$1.262 Other participants in 27 December 2012 HK$1.262 aggregate Director Mr. John Zhang 28 June 2012 HK$0.980 Mr. Chau Kwok Keung 28 June 2012 HK$0.980 Mr. Shi Cheng Qi 28 June 2012 HK$0.980 Other participants in 28 June 2012 HK$0.980 aggregate Director Mr. Shi Cheng Qi 24 May 2010 HK$1.490 Other participants in 24 May 2010 HK$1.490 aggregate

Balance as at 1 January Share options granted during Exercised during Lapsed during Balance as at 30 June 2014 the period the period the period 2014 – 13,000,000 – – 13,000,000 – 23,650,000 – (1,000,000) 22,650,000 4,020,000 – – – 4,020,000 300,000 – – – 300,000 300,000 – – – 300,000 300,000 – – – 300,000 6,638,000 – – – 6,638,000 5,000,000 – – – 5,000,000 228,000 – – – 228,000 210,000 – (210,000) – – 4,246,000 – (290,000) – 3,956,000 300,000 – – – 300,000 1,940,000 – – – 1,940,000

23,482,000 36,650,000 (500,000) (1,000,000) 58,632,000

24 Comtec Solar Systems Group Limited

Corporate Governance and Other Information

Notes:

• (1) Share options granted under the Share Option Scheme on 24 May 2010 shall vest in the relevant grantee in accordance with the timetable below with a 10-year exercise period (for this purpose, the date or each such date on which the Share Options are to vest being hereinafter referred to as a “Vesting Date”):

Vesting Date	Percentage of Share Options to vest
24 May 2010	50% of the total number of options granted
30 June 2011	50% of the total number of options granted

• (2) Share options granted under the Share Option Scheme on 28 June 2012 shall vest in the relevant grantee in accordance with the timetable below with a 10-year exercise period (for this purpose, the date or each such date on which the Share Options are to vest being hereinafter referred to as a “Vesting Date”):

Vesting Date	Percentage of Share Options to vest
On or after 28 June 2012	50% of the total number of options granted
On or after 28 September 2012	12.5% of the total number of options granted
On or after 28 December 2012	12.5% of the total number of options granted
On or after 28 March 2013	12.5% of the total number of options granted
On or after 28 June 2013	12.5% of the total number of options granted

• (3) Share options granted under the Share Option Scheme on 27 December 2012 shall vest in the relevant grantee in accordance with the timetable below with a 10-year exercise period (for this purpose, the date or each such date on which the Share Options are to vest being hereinafter referred to as a “Vesting Date”):

Vesting Date	Percentage of Share Options to vest
On or after 27 December 2012	50% of the total number of options granted
On or after 27 March 2013	12.5% of the total number of options granted
On or after 27 June 2013	12.5% of the total number of options granted
On or after 27 September 2013	12.5% of the total number of options granted
On or after 27 December 2013	12.5% of the total number of options granted

• (4) Share options granted under the Share Option Scheme on 30 September 2013 shall vest in the grantees in accordance with the timetable below with a 10-year exercise period (for this purpose, the date or each such date on which the share options are to vest being hereinafter referred to as a “Vesting Date”):

Percentage of Share Options to vest

Vesting Date Percentage of Share Options to vest On or after 30 September 2013 50% of the total number of options granted On or after 30 December 2013 12.5% of the total number of options granted On or after 30 March 2014 12.5% of the total number of options granted On or after 30 June 2014 12.5% of the total number of options granted On or after 30 September 2014 12.5% of the total number of options granted

Interim Report 2014 25

Corporate Governance and Other Information

• (5) Share options granted under the Share Option Scheme on 31 March 2014 shall vest in the relevant grantee in accordance with the timetable below with a 10-year exercise period (for this purpose, the date or each such date on which the Share Options are to vest being hereinafter referred to as a “Vesting Date”):

The 30,800,000 Share Options (including the Share Options granted to Mr. Chau Kwok Keung) shall be subject to a vesting period as followings:

Vesting Date	Percentage of Share Options to vest
On or after 31 March 2014	50% of the total number of options granted
On or after 30 June 2014	12.5% of the total number of options granted
On or after 30 September 2014	12.5% of the total number of options granted
On or after 31 December 2014	12.5% of the total number of options granted
On or after 31 March 2015	12.5% of the total number of options granted

The remaining 5,850,000 Share Options shall be subject to a vesting period as followings:

Vesting Date	Percentage of Share Options to vest
On or after 31 March 2014	1/3 of the total number of options granted
On or after 30 June 2014	1/12 of the total number of options granted
On or after 30 September 2014	1/12 of the total number of options granted
On or after 31 December 2014	1/12 of the total number of options granted
On or after 31 March 2015	1/12 of the total number of options granted
On or after 30 June 2015	1/12 of the total number of options granted
On or after 30 September 2015	1/12 of the total number of options granted
On or after 31 December 2015	1/12 of the total number of options granted
On or after 31 March 2016	1/12 of the total number of options granted

(6) Save as disclosed above, during the Period, no Share Options were granted, exercised or cancelled or lapsed.

Further details of the Pre-IPO Share Option Scheme and the Share Option Scheme are set out in note 21 to the financial statements.

26 Comtec Solar Systems Group Limited

Report on Review of Interim Condensed Consolidated Financial Statements

==> picture [81 x 39] intentionally omitted <==

TO THE BOARD OF DIRECTORS OF COMTEC SOLAR SYSTEMS GROUP LIMITED

INTRODUCTION

We have reviewed the condensed consolidated financial statements of Comtec Solar Systems Group Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) set out on pages 28 to 62, which comprise the condensed consolidated statement of financial position as of 30 June 2014 and the related condensed consolidated statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the six-month period then ended, and certain explanatory notes. The Main Board Listing Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”). The directors of the Company are responsible for the preparation and presentation of these condensed consolidated financial statements in accordance with IAS 34. Our responsibility is to express a conclusion on these condensed consolidated financial statements based on our review, and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

SCOPE OF REVIEW

We conducted our review in accordance with International Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of these condensed consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34.

Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong

29 August 2014

Interim Report 2014 27

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

for the six months ended 30 June 2014

NOTES Revenue Cost of sales Gross profit Other income 5 Other gains and losses 6 Distribution and selling expenses Administrative expenses Finance costs 7 Profit (loss) before taxation 8 Taxation 9 Profit (loss) and total comprehensive income (expense) for the period, attributable to owners of the Company Earnings (loss) per share — Basic 11 — Dilutive 11	Six months ended 30 June 2014 2013 RMB’000 RMB’000 (Unaudited) (Unaudited) 520,449 471,000 (476,999) (430,504) 43,450 40,496 2,914 2,998 9,534 (19,187) (6,544) (4,693) (36,441) (22,235) (9,798) (9,476) 3,115 (12,097) (125) (25) 2,990 (12,122) RMB cents RMB cents 0.22 (0.98) 0.22 (0.98)

28 Comtec Solar Systems Group Limited

Condensed Consolidated Statement of Financial Position

at 30 June 2014

NOTES Non-current assets Property, plant and equipment 12 Prepaid lease payments — non-current Prepaid assignment fee — non-current 14 Deposits paid for acquisition of property, plant and equipment 12 Advance to suppliers 13 Deferred tax assets Held-to-maturity investments Other financial instruments 16 Current assets Inventories Trade and other receivables 15 Bills receivable 15 Advance to suppliers 13 Prepaid lease payments — current Prepaid assignment fee — current 14 Pledged bank deposits Bank balances and cash Assets classified as held for sale Current liabilities Trade and other payables 17 Customers’ deposits received — current 14 Short-term bank loans 18 Tax liabilities Deferred revenue Liabilities associated with assets classified as held for sale Net current assets Total assets less current liabilities

30 June 2014 31 December 2013 RMB’000 RMB’000 (Unaudited) (Audited) 951,511 828,609 28,267 28,496 179,070 197,953 96,451 154,167 128,901 168,926 638 638 14,105 14,105 – 38,673 1,398,943 1,431,567 391,707 383,626 210,430 287,309 28,930 63,412 97,990 71,788 600 600 33,058 15,438 170,968 1,019 227,755 330,773 1,161,438 1,153,965 21,249 23,013 1,182,687 1,176,978 186,109 322,437 33,498 19,216 486,494 436,067 266 270 287 287 706,654 778,277 11 81 706,665 778,358 476,022 398,620 1,874,965 1,830,187

Interim Report 2014 29

Condensed Consolidated Statement of Financial Position

at 30 June 2014

NOTES Capital and reserves Share capital 20 Reserves Total equity Non-current liabilities Deferred tax liabilities Customers’ deposits received — non-current 14 Long-term bank loans 18 Provision for onerous contracts 13 Warrants 19 Deferred revenue	30 June 2014 31 December 2013 RMB’000 RMB’000 (Unaudited) (Audited) 1,205 1,157 1,604,393 1,523,656
	1,605,598 1,524,813
	9,652 9,568 179,070 197,953 5,525 7,889 39,107 39,107 31,000 45,700 5,013 5,157
	269,367 305,374
	1,874,965 1,830,187

30 Comtec Solar Systems Group Limited

Condensed Consolidated Statement of Changes in Equity

for the six months ended 30 June 2014

At 1 January 2013 (Audited) Loss and total comprehensive expense for the period Issue of ordinary shares Transaction costs attributable to issue of shares Exercise of share options Recognition of equity-settled share-based payments At 30 June 2013 (Unaudited) At 1 January 2014 (Audited) Profit and total comprehensive income for the period Issue of ordinary shares Transaction costs attributable to issue of shares Exercise of share options Recognition of equity-settled share-based payments At 30 June 2014 (Unaudited)

Share capital Share premium Share options reserve Special reserve Statutory surplus reserve Retained profits Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 1,039 1,050,798 22,080 11,012 84,583 295,174 1,464,686 – – – – – (12,122) (12,122) 97 168,905 – – – – 169,002 – (3,900) – – – – (3,900) 7 9,771 (3,218) – – – 6,560 – – 2,052 – – – 2,052 1,143 1,225,574 20,914 11,012 84,583 282,052 1,626,278 1,157 1,254,225 11,739 11,012 84,583 162,097 1,524,813 – – – – – 2,990 2,990 48 62,126 – – – – 62,174 – (192) – – – – (192) – 386 (191) – – – 195 – 191 15,427 – – – 15,618 1,205 1,316,736 26,975 11,012 84,583 165,087 1,605,598

Interim Report 2014 31

Condensed Consolidated Statement of Cash Flows

for the six months ended 30 June 2014

Operating activities Profit (loss) before taxation Adjustments for: Interest income Interest expense Depreciation of property, plant and equipment Loss on disposal of property, plant and equipment Release of deferred revenue Share-based payment expenses Release of prepaid lease payments (Gain) loss on fair value changes of warrants Gain on fair value changes of forward contracts Operating cash flows before movements in working capital Increase in inventories Decrease in trade and other receivables Decrease (increase) in bills receivable Decrease in advance to suppliers Decrease in trade and other payables Decrease in customers’ deposits received Cash generated from (used in) operations Tax paid Net cash generated from (used in) operating activities Investing activities Proceeds from other financial instruments Interest received Proceeds from disposal of property, plant and equipment Additions to and deposits paid for acquisition of property, plant and equipment Placement of pledged bank deposits Withdrawal of pledged bank deposits Purchase of held-to-maturity investments Net cash (used in) from investing activities

Six months ended 30 June 2014 2013 RMB’000 RMB’000 (Unaudited) (Unaudited) 3,115 (12,097) (2,771) (2,639) 9,798 9,476 40,968 40,472 304 68 (144) (287) 15,618 2,052 427 427 (14,700) 24,800 (500) (9,222) 52,115 53,050 (8,081) (93,647) 76,880 1,494 34,482 (91,977) 13,823 23,097 (163,962) (10,713) (3,338) (779) 1,919 (119,475) (45) (5) 1,874 (119,480) 37,047 – 2,771 2,639 103 323 (78,997) (18,389) (169,949) – – 135,749 – (14,105) (209,025) 106,217

32 Comtec Solar Systems Group Limited

Condensed Consolidated Statement of Cash Flows

for the six months ended 30 June 2014

Financing activities Bank loans raised Proceeds from issue of new shares Expenses on issue of shares Interest paid Repayment of bank loans Payment for redemption of convertible bonds and cancellation of warrants Net cash from financing activities Decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period, represented by bank balances and cash

Six months ended 30 June 2014 2013 RMB’000 RMB’000 (Unaudited) (Unaudited) 280,691 306,690 61,982 175,562 195 (3,900) (7,672) (9,476) (232,628) (373,597) – (90,910) 102,568 4,369 (104,583) (8,894) 333,478 345,909 228,895 377,015

Interim Report 2014 33

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

1. GENERAL

The Company is a public limited company incorporated in the Cayman Islands and its shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 30 October 2009. Its parent company and ultimate holding company is Fonty Holdings Limited, a company incorporated in the British Virgin Islands with limited liability. Its ultimate controlling party is Mr. John Zhang (“Mr. Zhang”).

The Company is an investment holding company. The principal activities of the Company’s subsidiaries are the manufacture and sales of solar wafers and related products and provision of processing services for solar products.

2. BASIS OF PREPARATION

The condensed consolidated financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and with International Accounting Standard 34 “Interim Financial Reporting”.

3. PRINCIPAL ACCOUNTING POLICIES

The accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2014 are the same as those followed in the preparation of the Group’s annual financial statements for the year ended 31 December 2013.

In the current interim period, the Group has applied, for the first time, a new Interpretation and certain amendments to International Financial Reporting Standards (“IFRSs”) that are mandatorily effective for the current interim period.

The application of the new Interpretation and amendments to IFRSs in the current interim period has had no material effect on the amounts reported in these condensed consolidated financial statements and/or disclosures set out in these condensed consolidated financial statements.

34 Comtec Solar Systems Group Limited

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

3. PRINCIPAL ACCOUNTING POLICIES (continued)

The Group has not early applied the following new or revised IFRSs that have been issued but are not yet effective:

IFRS 9 Financial Instruments[1] IFRS 14 Regulatory Deferral Accounts[2] IFRS 15 Revenue from Contracts with Customers[3] Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations[5] Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation[5] Amendments to IAS 19 Defined Benefit Plans: Employee Contributions[4] Amendments to IFRSs Annual Improvements to IFRSs 2010–2012 Cycle[6] Amendments to IFRSs Annual Improvements to IFRSs 2011–2013 Cycle[4] Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants[5] Amendments to IAS 27 Equity Method in Separate Financial Statements[5]

• 1 Effective for annual periods beginning on or after 1 January 2018

• 2 Effective for first annual IFRS financial statements beginning on or after 1 January 2016

• 3 Effective for annual periods beginning on or after 1 January 2017

• 4 Effective for annual periods beginning on or after 1 July 2014

• 5 Effective for annual periods beginning on or after 1 January 2016

• 6 Effective for annual periods beginning on or after 1 July 2014, with limited exceptions

The directors of the Company do not anticipate that the application of the above new or revised IFRSs will have any significant impact on the Group’s financial results and financial position.

4. SEGMENT INFORMATION

The Group is currently engaged in manufacturing and sales of solar wafers and related products and provision of processing services for solar products. Mr. Zhang, the chief operating decision maker of the Group, regularly reviews revenue analysis by major products and results of the Group as a whole for the purposes of performance assessment and making decisions about resource allocation. Accordingly, the Group has only one operating segment for financial reporting purpose. The Group’s segment profit (loss) is the profit (loss) before taxation of the Group.

Interim Report 2014 35

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

5. OTHER INCOME

Government grant Interest income	Six months ended 30 June 2014 2013 RMB’000 RMB’000 (Unaudited) (Unaudited) 143 359 2,771 2,639
	2,914 2,998

6. OTHER GAINS AND LOSSES

Net foreign exchange losses Loss on disposal of property, plant and equipment Gain on fair value changes of forward contracts_(note 16) Gain (loss) on fair value changes of 2012 Warrants(defined in note 19) Provision for lawsuit case(note)_	Six months ended 30 June 2014 2013 RMB’000 RMB’000 (Unaudited) (Unaudited) (3,220) (3,541 (304) (68 500 9,222 14,700 (24,800 (2,142) –
	9,534 (19,187

Note: During 2013, a lawsuit arose from an independent third party (the “Counterparty”) against the Group for failing to execute in full the obligations of delivery of solar products to the Counterparty in accordance with the relevant sale and purchase agreement. The Group provided an amount of approximately RMB4,000,000 for the case in 2013. During the six months ended 30 June 2014, the lawsuit was concluded by court and the Group incurred a further loss of approximately RMB2,142,000. The Group recognised such loss in profit or loss.

36 Comtec Solar Systems Group Limited

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

7. FINANCE COSTS

Interest expense in relation to bank loans wholly repayable within five years 8. PROFIT (LOSS) BEFORE TAxATION Profit (loss) before taxation has been arrived at after charging: Cost of inventories recognised as expense Depreciation of property, plant and equipment Release of prepaid lease payments Research and development expenses (included in administrative expenses) Operating lease rentals in respect of rented premises

Six months ended 30 June 2014 2013 RMB’000 RMB’000 (Unaudited) (Unaudited) 9,798 9,476

Six months ended 30 June 2014 2013 RMB’000 RMB’000 (Unaudited) (Unaudited) 476,999 430,504 40,968 40,472 427 427 3,716 4,175 588 424

9. TAxATION

	Six months ended 30 June	Six months ended 30 June
	2014	2013
	RMB’000	RMB’000
	(Unaudited)	(Unaudited)
People’s Republic of China (the “PRC”) Enterprise Income Tax
— Current period	41	39
Deferred taxation	84	(14)
	125	25

Interim Report 2014 37

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

9. TAxATION (continued)

Taxation arising in the PRC is recognised based on management’s best estimate of the average annual income tax rate expected for the full financial year. The estimated average annual tax rate used is 25% for the six months ended 30 June 2014 and 30 June 2013. There is no provision for Hong Kong Profits Tax since the group entities incorporated in Hong Kong incurred tax losses for both periods. Withholding tax has been provided for based on the anticipated dividends to be distributed by PRC entities to non-PRC residents, if any.

10. DIVIDENDS

No dividends were paid, declared or proposed during the six months ended 30 June 2014 and 2013.

11. EARNINGS (LOSS) PER SHARE

The calculation of basic and diluted earnings (loss) per share attributable to the owners of the Company is based on the following data:

Profit (loss) Profit (loss) for the period attributable to owners of the Company for the purpose of basic earnings (loss) per share Number of shares Weighted average number of ordinary shares for the purpose of basic (loss) earnings per share Effect of dilutive potential ordinary shares: Share options Weighted average number of ordinary shares for the purpose of diluted earnings (loss) per share	Six months ended 30 June 2014 2013 RMB’000 RMB’000 (Unaudited) (Unaudited) 2,990 (12,122) 1,344,017,350 1,237,149,704 10,700,091 1,354,717,441
	1,344,017,350 10,700,091 1,354,717,441

38 Comtec Solar Systems Group Limited

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

11. EARNINGS (LOSS) PER SHARE (continued)

The Company’s outstanding 2012 Warrants (defined in note 19) did not have a dilutive effect on the Company’s earnings (loss) per share for the six months ended 30 June 2014 and 30 June 2013 since their potential conversion to ordinary shares would incur or decrease loss per share.

Certain outstanding share options of the Company have not been included in the computation of diluted earnings per share as they did not have a dilutive effect on the Company’s earnings (loss) per share for the six months ended 30 June 2014 and 30 June 2013 as their exercise prices were higher than the average market prices of the Company or they will decrease the loss per share of the Company.

12. DEPOSITS PAID FOR AND PURCHASES OF PROPERTY, PLANT AND EQUIPMENT

During the period, the Group spent approximately RMB78,997,000 (six months ended 30 June 2013: RMB18,389,000) on deposits paid for acquisition of property, plant and equipment and purchases of property, plant and equipment.

13. ADVANCE TO SUPPLIERS/PROVISION FOR ONEROUS CONTRACTS

From time to time, the Group makes advance payments to suppliers of raw materials prior to delivery of raw materials by these suppliers. Except for the purchase agreements with two major suppliers detailed below, the advance payments are for purchases in the next twelve months from the end of each reporting period and are therefore classified as current assets.

In prior years, the Group entered into several purchase agreements with two major suppliers, who are independent parties not related to the Group, whereby the Group is committed to purchasing a minimum quantity of raw materials, mainly polysilicon virgins (to be used in the manufacture of its products), each year during the period from 1 January 2008 to 31 December 2021 (the “Supply Period”) at pre-determined prices. According to the terms of the agreements, the Group made advances to these suppliers during the six months ended 30 June 2014 and the year ended 31 December 2013. At 30 June 2014 and 31 December 2013, the Group had outstanding aggregate advance payments, net of allowance, of approximately RMB105 million and RMB240 million, respectively, with these suppliers. The advances are unsecured, interest-free and will be used to offset part of the invoiced amounts in the manner as discussed below on an annual basis before expiry of the agreements at the end of the Supply Period.

Pursuant to the terms of the agreements with these two suppliers, during each year of the Supply Period, the amount of advances made in respect of the agreed contract quantity in that particular year would be utilised to reduce the invoiced amount of purchases up to those annual agreed quantities. The total minimum amount of raw materials to be purchased by the Group from the two major suppliers during the Supply Period is approximately RMB6,357,501,000.

Interim Report 2014 39

for the six months ended 30 June 2014

Notes to the Condensed Consolidated Financial Statements

13. ADVANCE TO SUPPLIERS/PROVISION FOR ONEROUS CONTRACTS (continued)

For the arrangement with one of the major suppliers, if the minimum purchase requirement is not met in a particular year, the advance made to that supplier in relation to the minimum purchase commitment would be forfeited. In addition, pursuant to the terms of this purchase agreement, the Group granted to this supplier a continuing security interest in the raw materials supplied by such supplier and the proceeds from the sale or insurance of such raw materials and if applicable, all late payments, interest and expenses necessary to enforce such security interest. The supplier has the right to take all necessary measures to create, perfect, preserve and enforce the security interest. At 30 June 2014 and 31 December 2013, the Group did not have any outstanding trade payable with this supplier.

For the arrangement with the other major supplier, the Group is obliged to purchase at least the minimum amount as set out in the agreement. If the Group fails to accept deliveries for a certain number of times in any calendar year, the Group’s payment obligations for the minimum purchase commitment may be accelerated in that particular year and the Group will be liable for paying to the supplier the difference between the actual purchase and the minimum purchase commitment in that particular year.

These purchase agreements do not expressly stipulate that the Group will be subject to any other liabilities should the Group fail to meet the minimum purchase commitment. The Group’s minimum annual purchase commitment during the remaining Supply Period is as follows:

Year ending 31 December 2014 2015 2016 2017 2018 2019 2020 2021	Amount equivalent to RMB’000 560,140 707,960 675,681 204,477 322,409 345,609 345,609 345,609
	3,507,494

At the end of each reporting period, the directors of the Company estimate the amount of advances that is expected to be settled by offsetting against the purchases of the agreed contract quantity in the next twelve months and classify it as a current asset. The remaining balance is classified as a non-current asset in the condensed consolidated statement of financial position.

40 Comtec Solar Systems Group Limited

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

13. ADVANCE TO SUPPLIERS/PROVISION FOR ONEROUS CONTRACTS (continued)

Allowance for advance to suppliers:

Balance at 1 January 2013 Impairment losses recognised Balance at 31 December 2013 and 30 June 2014 Allowance for the provision for onerous contracts: Balance at 1 January 2013, 31 December 2013 and 30 June 2014	RMB’000 7,149 126,781
	133,930
	RMB’000 39,107

During the six months ended 30 June 2014 and the year ended 31 December 2013, the Group performed an analysis of the sufficiency of impairment losses recognised in respect of advance to suppliers and provision for onerous contracts, due to volatility of the solar industry which the Group is engaged in, with reference to the Group’s budgeted annualized production capacity, the Group’s product mix, recent market demand for the Group’s products, updated forecasted selling prices of the products that reflected current market assessments, the Group’s committed delivery of solar products, etc. The Group recognised impairment losses in respect of advances to the two major suppliers of approximately RMB126,781,000 during the year ended 31 December 2013. No further impairment losses were recognised in the six months ended 30 June 2014. No further provision for onerous contracts was made during the year ended 31 December 2013 and the six months ended 30 June 2014. Impairment losses made or recognised by the Group during the year ended 31 December 2013 represented expected losses to be suffered or future payments that the Group is presently obliged to make under the above-mentioned non-cancellable operating contracts, after taking into account the revenue expected to be earned and costs to be incurred in production, in certain calendar year(s) in the Supply Period. The directors of the Company will further assess sufficiency of impairment losses recognised for advance appliers, provision for onerous contract and reversal of these provision, if any, for the year ending 31 December 2014.

Interim Report 2014 41

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

14. PREPAID ASSIGNMENT FEE/CUSTOMERS’ DEPOSITS RECEIVED

On 27 December 2013, a wholly-owned subsidiary of the Company, namely Comtec Solar (Hong Kong) Limited (“Comtec Solar HK”), entered into a wafer supply agreement (the “Wafer Supply Agreement”) with Mission Solar Energy LLC, a Delaware limited liability company (“Mission”) which is an independent third party, pursuant to which Comtec Solar HK will supply solar wafers with capacity of approximately 500MW to Mission from June 2014 to July 2017 at pre-determined delivery schedule and supply price.

In addition, Mission paid non-refundable deposits of USD35 million (equivalent to approximately RMB213,391,000) to Comtec Solar HK which the amount will be used to offset the related consideration payable from June 2014 to July 2017 upon delivery of the solar wafers under the Wafer Supply Agreement. As a result, the Group recognised such deposits as customers’ deposits received. At 30 June 2014 and 31 December 2013, the directors of the Company estimate the amount of advances that is expected to be settled by the offset of the sales of the agreed contract quantity in the next twelve months and classify it as current liability. The remaining balance is classified as non-current liability.

Carrying amounts of customers’ deposits received: Within one year One to two years More than two years, but not exceeding five years Less: Amounts due within one year shown under current liabilities Amounts shown under non-current liabilities	30 June 2014 31 December 2013 RMB’000 RMB’000 (Unaudited) (Audited) 33,058 15,438 72,660 51,996 106,410 145,957 212,128 213,391 (33,058) (15,438) 179,070 197,953

Immediately before the conclusion of the Wafer Supply Agreement between Comtec Solar (HK) and Mission, Comtec Solar (HK) entered into an agreement with an independent third party (the “Assignor” or the former seller of Mission) and paid an amount of USD35 million (equivalent to approximately RMB213,391,000) to the Assignor as an assignment fee that Comtec Solar (HK) assumed obligations as seller and the Assignor assigned its rights to Comtec Solar (HK) under the Wafer Supply Agreement over the relevant contractual period.

42 Comtec Solar Systems Group Limited

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

14. PREPAID ASSIGNMENT FEE/CUSTOMERS’ DEPOSITS RECEIVED (continued)

The Group recognised such prepaid assignment fee in the condensed consolidated statement of financial position. At 30 June 2014 and 31 December 2013, the directors of the Company estimate the amount of assignment fee that is expected to be released in profit or loss over the sales of the agreed contract quantity in the next twelve months and classify it as current asset. The remaining balance is classified as non-current asset.

Carrying amounts of prepaid assignment fee: Current portion Non-current portion	30 June 2014 31 December 2013 RMB’000 RMB’000 (Unaudited) (Audited) 33,058 15,438 179,070 197,953
	212,128 213,391

The directors of the Company assessed sufficiency of provision for onerous contract in relation to the Wafer Supply Agreement periodically. Details of such analysis are set out in note 13.

15. TRADE AND OTHER RECEIVABLES/BILLS RECEIVABLE

Trade receivables Utility deposits Value-added-tax recoverable Other receivables and prepayments Bills receivable	30 June 2014 31 December 2013 RMB’000 RMB’000 (Unaudited) (Audited) 134,006 174,411 2,889 3,489 62,912 82,612 10,623 26,797
	210,430 287,309
	28,930 63,412

Interim Report 2014 43

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

15. TRADE AND OTHER RECEIVABLES/BILLS RECEIVABLE (continued)

The Group requests prepayment from customers before delivery of goods and allows a credit period of 7 to 180 days on a case-by-case basis. The following is an aging analysis of trade receivables net of allowance for doubtful debts, presented based on invoice date at the end of the reporting period, which approximated the respective revenue recognition dates:

Age 0 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days	30 June 2014 31 December 2013 RMB’000 RMB’000 (Unaudited) (Audited) 22,698 62,024 64,009 74,290 44,941 34,810 1,255 84 1,103 3,203
	134,006 174,411

The following is an aging analysis of bills receivable presented based on invoice date at the end of the reporting period:

Age 0 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days	30 June 2014 31 December 2013 RMB’000 RMB’000 (Unaudited) (Audited) – 180 1,401 7,600 1,000 11,693 26,029 40,939 500 3,000
	28,930 63,412

44 Comtec Solar Systems Group Limited

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

16. OTHER FINANCIAL INSTRUMENTS

	30 June	31 December
	2014	2013
	RMB’000	RMB’000
	(Unaudited)	(Audited)
Fair value through profit or loss (“FVTPL”)	–	38,673

Long-term contract

In 2012, the Group entered into an arrangement with an established commercial bank in Hong Kong pursuant to which the Group would buy United States Dollars (“USD”) with RMB at an exchange rate of 6.3205 from this bank for a contractual period of three years at a principal amount of approximately USD63,444,000 (equivalent to approximately RMB401,000,000). The contract would be settled net upon maturity date on 16 March 2015.

On 29 January 2014, the Group and the bank mutually agreed to terminate this arrangement. Upon termination of the arrangement, the Group received USD2,080,000 (equivalent to approximately RMB12,800,000) from the bank and resulted in a gain of approximately USD81,000 (equivalent to approximately RMB500,000) as other gains and losses in the condensed consolidated statement of profit or loss and other comprehensive income. At 31 December 2013, the contract was recognised as other financial assets of approximately RMB12,182,000 in the consolidated statement of financial position.

Principal-protected unsecured deposit

As at 31 December 2013, the Group had a contract of principal-protected unsecured deposit with a bank for a period of five years. The significant terms and conditions relating to the financial assets as FVTPL were as follows:

Notional amount Start date Deposit end date Interest rate USD4,000,000 18 July 2011 17 July 2016 variable	Fair value as at Fair value as at 30 June 2014 31 December 2013 RMB’000 RMB’000 (Unaudited) (Audited) – 26,491

Interim Report 2014 45

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

16. OTHER FINANCIAL INSTRUMENTS (continued)

Principal-protected unsecured deposit (continued)

The deposit was a principal-protected deposit guaranteed by the relevant bank. In accordance with the relevant terms of the agreement, the yield rate was 5.00% per annum for the period from 18 July 2011 to 17 July 2012. The yield rate for the remaining years ending 17 July 2016 would be the higher of 0.65% or a rate subject to the formula below:

10% per annum * (Index (as defined below) at the end of each contractual period of the agreement – Index at 18 July 2012)/Index at 18 July 2012.

Index referred to a portfolio of financial instruments, related to forward and spot exchange rates of USD and Hong Kong dollars (“HKD”) and interest rates, and were extracted from Bloomberg. The deposit was denominated in USD.

On 28 January 2014, the Group agreed with the bank to withdraw the deposit with an account of USD3,960,000 (equivalent to approximately RMB24,365,000), which resulted in an interest expense of approximately RMB2,126,000 recognised in the condensed consolidated statement of profit or loss and other comprehensive income.

The deposit at 31 December 2013 was designated at fair value through profit or loss upon initial recognition as the deposit formed part of contracts containing embedded derivatives. It was stated at fair values derived from discounted cash flow analysis based on the terms of the deposits and relevant market inputs, mainly forward and spot exchange rates of USD and HKD and interest rates on 31 December 2013, which was provided by the counterparty financial institution.

17. TRADE AND OTHER PAYABLES

Trade payables Payables for acquisition of property, plant and equipment Other payables and accrued charges	30 June 2014 31 December 2013 RMB’000 RMB’000 (Unaudited) (Audited) 119,569 278,805 35,011 23,973 31,529 19,659
	186,109 322,437

46 Comtec Solar Systems Group Limited

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

17. TRADE AND OTHER PAYABLES (continued)

The following is an aging analysis of trade payables presented based on the invoice date at the end of each reporting period.

Age 0 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days	30 June 2014 31 December 2013 RMB’000 RMB’000 (Unaudited) (Audited) 27,222 123,180 11,575 71,727 13,178 51,294 21,016 31,107 46,578 1,497
	119,569 278,805

The average credit period on purchases of goods is 30 days to 90 days and certain suppliers grant a longer credit period on a case-by-case basis.

Interim Report 2014 47

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

18. BANK LOANS

Bank loans — secured — unsecured Carrying amounts repayable: Within one year One to two years More than two years, but not exceeding five years Less: Amounts due within one year shown under current liabilities Amounts shown under non-current liabilities	30 June 2014 31 December 2013 RMB’000 RMB’000 (Unaudited) (Audited) 435,734 130,308 56,285 313,648 492,019 443,956 486,494 436,067 4,873 4,829 652 3,060 492,019 443,956 (486,494) (436,067) 5,525 7,889

During the six months ended 30 June 2014, the Group obtained new bank loans amounting to approximately RMB280,691,000 (six months ended 30 June 2013: RMB306,690,000). The loans carry interest at variable market rates ranging from 0.78% to 6.00% (six months ended 30 June 2013: 0.79% to 6.56%) per annum.

48 Comtec Solar Systems Group Limited

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

19. WARRANTS

In 2012, the Company and an independent third party not related to the Group (the “Investor”) entered into a warrant subscription agreement, pursuant to which the Company agreed to issue the Investor detachable and transferrable warrants (“2012 Warrants”), exercisable for a period of four years from the date of issue, to the Investor who was entitled to subscribe for up to 94,354,839 shares at a price of HKD1.24 per share.

Details of the 2012 Warrants are set out in the Company’s annual report for the year ended 31 December 2013.

The movement of the fair value of the 2012 Warrants was set out below:

Carrying amount at 1 January 2013 Loss on fair value change recognised in profit or loss Carrying amount at 31 December 2013 Gain on fair value change recognised in profit or loss Carrying amount at 30 June 2014	RMB’000 39,400 6,300
	45,700 (14,700)
	31,000

The fair values of the 2012 Warrants of the Company at 30 June 2014 and 31 December 2013 were calculated using the Binominal pricing model. The inputs into the model were as follows:

	30 June	31 December
	2014	2013
	RMB’000	RMB’000
	(Unaudited)	(Audited)
Share price	HK$1.25	HK$1.46
Exercise price	HK$1.24	HK$1.24
Warrant volatility	65.70%	67.19%
Warrant life	1.7 years	2.2 years
Risk-free interest rate	0.306%	0.409%

The risk-free interest rates were based on yield of Hong Kong government bonds at the date of valuation. Expected volatility was determined by using the historical volatility of the Company’s share prices over the previous years. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of behavioral considerations. Changes in variables and assumptions may result in changes in the fair values of the 2012 Warrants.

Interim Report 2014 49

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

20. SHARE CAPITAL

The share capital of the Group represented the issued and fully paid share capital of the Company.

Authorised: Ordinary shares Ordinary shares of HKD0.001 each at 1 January 2013, 31 December 2013 and 30 June 2014 Issued and fully paid: Ordinary shares Ordinary shares of HKD0.001 each at 1 January 2013 Issue of shares_(note 1) Exercise of share options(note 2) Ordinary shares of HKD0.001 each at 31 December 2013 Issued of shares(note 3) Exercise of share options(note 4)_ Ordinary shares of HKD0.001 each at 30 June 2014 Presented as RMB: Ordinary shares	Number of shares Amount HKD’000 7,600,000,000 7,600
	Number of shares Amount HKD’000 1,183,890,000 1,184 121,351,765 122 26,348,000 26
	1,331,589,765 1,332 59,541,985 60 500,000 –
	1,391,631,750 1,392
	30 June 2014 31 December 2013 RMB’000 RMB’000 (Unaudited) (Audited) 1,205 1,157

50 Comtec Solar Systems Group Limited

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

20. SHARE CAPITAL (continued)

Notes:

• (1) In January 2013, the Company issued 120,000,000 ordinary shares of HKD0.001 each for a consideration of HKD1.74 per share. The allotment was in the form of a private placement with shares subscribed by independent third parties not related to the Group. In July 2013, the Company issued 1,351,765 ordinary shares of HK$0.001 each at nil consideration to third party consultants who provided consultancy services to the Group.

• (2) During the year ended 31 December 2013, the Company issued 150,000, 9,836,000 and 16,362,000 new shares upon exercise of share options at the exercise price of HKD1.49 per share, HKD0.98 per share and HKD1.26 per share, respectively.

• (3) In April 2014, the Company issued 59,541,985 ordinary shares of HKD0.001 each for a consideration of HKD1.31 per share. The allotment was in the form of a private placement with shares subscribed by independent third parties not related to the Group.

• (4) During the six months ended 30 June 2014, the Company issued 500,000, new shares upon exercise of share options at the exercise price of HKD0.98 per share.

All the shares issued by the Company during the six months ended 30 June 2014 and year ended 31 December 2013 ranked pari passu with the existing shares in all respects.

21. SHARE-BASED COMPENSATION

(A) Pre-IPO Share Option Scheme

Set out below are the details of movements of the outstanding options granted under the Pre-IPO Share Option Scheme during the six months ended 30 June 2014 and 30 June 2013:

Directors: Mr. Leung Ming Shu (“Mr. Leung”) Mr. Daniel Dewitt Martin (“Mr. Daniel”) Mr. Kang Sun (“Mr. Kang”)	Number of options Outstanding as at 1 January 2013, 30 June 2013 and 1 January 2014 Exercised during the period Forfeited during the period Lapsed in the period Outstanding as at 30 June 2014 63,000 – – – 63,000 200,000 – – – 200,000 249,000 – – – 249,000
	512,020 – – – 512,020

Interim Report 2014 51

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

21. SHARE-BASED COMPENSATION (continued)

(A) Pre-IPO Share Option Scheme (continued)

The share options under the Pre-IPO Share Option Scheme exercisable at HKD2.51 per share as at 1 January 2013, 30 June 2013, 1 January 2014 and 30 June 2014 were 512,020.

No share options under the Pre-IPO Share Option Scheme were exercised during the period ended 30 June 2014 and 30 June 2013.

At 30 June 2014, the number of shares in respect of which options under the Pre-IPO Share Option Scheme remained outstanding was 512,020 (30 June 2013: 512,020), representing 0.04% (30 June 2013: 0.04%) of the shares of the Company in issue at that date.

The Company did not recognise any expense in relation to the share options under the Pre-IPO Share Option Scheme during the six months ended 30 June 2014 and 30 June 2013 since the share options were fully vested in the prior period.

(B) Share Option Scheme

Set out below are the details of movements of the outstanding options granted under the Share Option Scheme during the six months ended 30 June 2014 and 30 June 2013:

Granted on 24 May 2010

For the six months ended 30 June 2014:

Director: Mr. Shi Chen Qi (“Mr. Shi”) Employees Exercisable at the end of the period	Number of options Outstanding as at 1 January 2014 Exercised during the period Forfeited during the period Lapsed in the period Outstanding as at 30 June 2014 300,000 – – – 300,000 1,940,000 – – – 1,940,000
	2,240,000 – – – 2,240,000
	2,240,000 2,240,000

52 Comtec Solar Systems Group Limited

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

21. SHARE-BASED COMPENSATION (continued)

(B) Share Option Scheme (continued)

Granted on 24 May 2010 (continued)

For the six months ended 30 June 2013:

Director: Mr. Shi Employees Exercisable at the end of the period	Number of options Outstanding as at 1 January 2013 Exercised during the period Forfeited during the period Lapsed in the period Outstanding as at 30 June 2013 300,000 – – – 300,000 2,090,000 (150,000) – – 1,940,000
	2,390,000 (150,000) – – 2,240,000
	2,390,000 2,240,000

In respect of the share options exercised during the six months ended 30 June 2013, the weighted average share price at the dates of exercise is HKD1.49 per share.

At 30 June 2014, the number of shares in respect of which options granted on 24 May 2010 under the Share Option Scheme remained outstanding was 2,240,000 (30 June 2013: 2,240,000), representing 0.16% (30 June 2013: 0.17%) of the shares of the Company in issue at that date.

Interim Report 2014 53

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

21. SHARE-BASED COMPENSATION (continued)

(B) Share Option Scheme (continued)

Granted on 28 June 2012

For the six months ended 30 June 2014:

Director: Mr. Zhang Mr. Chau Kwok Keung (“Mr. Chau”) Mr. Shi Employees Exercisable at the end of the period	Number of options Outstanding as at 1 January 2014 Issue during the period Exercised during the period Forfeited during the period Outstanding as at 30 June 2014 5,000,000 – – – 5,000,000 228,000 – – – 228,000 210,000 – (210,000) – – 4,246,000 – (290,000) – 3,956,000
	9,684,000 – (500,000) – 9,184,000
	9,684,000 9,184,000

For the six months ended 30 June 2013:

Director: Mr. Zhang Mr. Chau Mr. Shi Employees Exercisable at the end of the period	Number of options Outstanding as at 1 January 2013 Issue during the period Exercised during the period Forfeited during the period Outstanding as at 30 June 2013 5,000,000 – – – 5,000,000 6,000,000 – (5,250,000) – 750,000 360,000 – – – 360,000 8,480,000 – (2,930,000) – 5,550,000
	19,840,000 – (8,180,000) – 11,660,000
	9,920,000 11,660,000

In respect of the share options exercised during the six months ended 30 June 2014, the weighted average share price at the dates of exercise is HKD0.98 per share.

At 30 June 2014, the number of shares in respect of which options granted on 28 June 2012 under the Share Option Scheme remained outstanding was 9,184,000 (30 June 2013: 11,660,000), representing 0.66% (30 June 2013: 0.87%) of the shares of the Company in issue at that date.

54 Comtec Solar Systems Group Limited

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

21. SHARE-BASED COMPENSATION (continued)

(B) Share Option Scheme (continued)

Granted on 27 December 2012

For the six months ended 30 June 2014

Director: Mr. Leung Mr. DeWitt Mr. Kang Employees Consultants Exercisable at the end of the period	Number of options Outstanding as at 1 January 2014 Issue during the period Exercised during the period Forfeited during the period Outstanding as at 30 June 2014 300,000 – – – 300,000 300,000 – – – 300,000 300,000 – – – 300,000 600,000 – – – 600,000 6,038,000 – – – 6,038,000
	7,538,000 – – – 7,538,000
	7,538,000 7,538,000

For the six months ended 30 June 2013

Director: Mr. Leung Mr. DeWitt Mr. Kang Employees Consultants Exercisable at the end of the period	Number of options Outstanding as at 1 January 2013 Issue during the period Exercised during the period Forfeited during the period Outstanding as at 30 June 2013 300,000 – – – 300,000 300,000 – – – 300,000 300,000 – – – 300,000 600,000 – – – 600,000 22,400,000 – – – 22,400,000
	23,900,000 – – – 23,900,000
	11,950,000 17,925,000

At 30 June 2014, the number of shares in respect of which options granted on 27 December 2012 under the Share Option Scheme remained outstanding was 7,538,000 (30 June 2013: 23,900,000), representing 0.54% (30 June 2013: 1.82%) of the shares of the Company in issue at that date.

Interim Report 2014 55

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

21. SHARE-BASED COMPENSATION (continued)

(B) Share Option Scheme (continued)

Granted on 30 September 2013

For the six months ended 30 June 2014

Employees Consultants Exercisable at the end of the period	Number of options Outstanding as at 1 January 2014 Issue during the period Exercised during the period Forfeited during the period Outstanding as at 30 June 2014 3,500,000 – – – 3,500,000 520,000 – – – 520,000
	4,020,000 – – – 4,020,000
	2,512,500 2,512,500

At 30 June 2014, the number of shares in respect of which options granted on 30 September 2013 under the Share Option Scheme remained outstanding was 4,020,000, respectively 0.29% of the shares of the Company in issue.

Pursuant to a board resolution dated 31 March 2014, the Company granted 36,650,000, representing 2.75% of the shares of the Company in issue at the date, share options to a directly, certain employees and consultants of the Company under the Share Option Scheme. Set out below were details of the outstanding options granted under the Share Option Scheme in 2013:

• (1) Options granted on 31 March 2014 were at an exercise price of HK$1.39 per share.

Except for the expenses in relation to share options granted to certain consultants which are fully charged to profit or loss upon their grant,

• (a) holders of 5,850,000 options granted on 31 March 2014 might only exercise their options in the following manner:

• (i) One-third of the share options vested and exercisable on date of grant and

• (ii) The remaining share options will have one-twelfth to be vested every three months since 31 March 2014.

56 Comtec Solar Systems Group Limited

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

21. SHARE-BASED COMPENSATION (continued)

(B) Share Option Scheme (continued)

Granted on 30 September 2013 (continued)

• (1) (continued)

• (b) holders of 30,800,000 options granted on 31 March 2014 might only exercise their options in the following manner:

  • (i) Half of the share options vested and exercisable on date of grant and

  • (ii) The remaining share options will have one-eighth to be vested every three months since 31 March 2014.

• (2) The options will be lapsed or forfeited automatically and not be exercisable (to the extent not already exercised) to the earlier of the end of their exercisable periods or when the grantees ceased to be employees of the Group.

Set out below are details of movements of the outstanding options granted under the Share Option Scheme on 31 March 2014 during the six months ended 30 June 2014:

Granted on 31 March 2014

For the six months ended 30 June 2014

Director: Mr. Chau Employees Consultants Exercisable at the end of the period	Number of options Outstanding as at 1 January 2014 Issue during the period Exercised during the period Forfeited during the period Outstanding as at 30 June 2014 – 13,000,000 – – 13,000,000 – 5,850,000 – (1,000,000) 4,850,000 – 17,800,000 – – 17,800,000
	– 36,650,000 – (1,000,000) 35,650,000
	– 25,356,000

At 30 June 2014, the number of shares in respect of which options granted on 31 March 2014 under the Share Option Scheme remained outstanding was 35,650,000, representing 2.56% of the shares of the Company.

Interim Report 2014 57

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

21. SHARE-BASED COMPENSATION (continued)

(B) Share Option Scheme (continued)

Granted on 31 March 2014 (continued)

The estimated fair value of share options granted on 31 March 2014 was approximately RMB19 million. The fair value was calculated using the Binomial model. The inputs into the model are as follows:

Share price	HK$1.35
Exercise price	HK$1.38
Expected volatility	65.10%
Expected life	2.0 years
Risk-free interest rate	2.29%

The risk-free rate was based on market yield rate of Hong Kong Government Bond with maturity on 20 February 2024 and 20 August 2024 for employees and directors respectively as of the grant date. Expected volatility was determined by using the historical volatility of the Company’s share prices. The suboptimal exercise multiple used in the model represents the estimated ratio of future share price over the exercise price when the grantees will exercise the options and has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. Changes in variables and assumptions may result in changes in the fair values of the share options.

The Group recognised an expense of approximately RMB15,618,000 (30 June 2013: RMB2,052,000) for the six months ended 30 June 2014 in relation to the share options granted by the Company under the Share Option Scheme.

22. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS

Some of the Group’s financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs used), as well as the level of the fair value hierarchy into which the fair value measurements are categorised (levels 1 to 3) based on the degree to which the inputs to the fair value measurements is observable.

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active market for identical assets or liabilities;

• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

58 Comtec Solar Systems Group Limited

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

22. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (continued)

							Relationship of
						Significant	unobservable
	Financial assets/	Fair value as at		Fair value	Valuation technique(s)	unobservable	inputs to
	financial liabilities	30/06/2014	31/12/2013	hierarchy	and key input(s)	input(s)	fair value
(1)	Long-term foreign	N/A	Assets —	Level 2	Discounted cash flows.	N/A	N/A
	currency forward		RMB12,182,000		Future cash flows are
	contracts classified as				estimated based on forward
	other financial				exchange rates (from
	instruments in the				observable forward exchange
	condensed				rates at the end of the
	consolidated statement				reporting period) and
	of financial position				contracted forward rates,
					discounted at rates that
					reflected the credit risk of
					various counterparties.
(2)	Principal-protected	N/A	Assets —	Level 2	Discounted cash flows. Future	N/A	N/A
	unsecured deposits		RMB26,491,000		cash flows are estimated
	classified as other				based on forward exchange
	financial assets in the				rates (from observable forward
	condensed				exchange rates at the end of
	consolidated statement				the reporting period) and
	of financial position				contracted forward rates,
					discounted at a rate that
					reflected the credit risk of the
					counterparty.
(3)	Warrants classified as	Liabilities —	Liabilities —	Level 3	Binomial Model with parameters	Expected volatility	The higher of the
	derivative financial	RMB31,000,000	RMB45,700,000		of the Company’s shares,	of the warrants,	expected
	instruments in the				including share prices,	which is made	volatility, the
	condensed				expected volatility, dividend	reference to the	higher fair value
	consolidated statement				yield, etc, at the end of the	historical	of the warrants.
	of financial position				reporting period and expected	volatility to the
					life of the warrants, discounted	share prices of
					at a rate that reflected credit	the Company
					risk of the Company.

The directors of the Company consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the condensed consolidated financial statements approximate their fair values.

Interim Report 2014 59

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

22. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (continued)

Reconciliation of Level 3 fair value measurements of 2012 Warrants

At beginning of the period/year (Gain) loss on fair value change At end of the period/year	30 June 2014 31 December 2013 RMB’000 RMB’000 (Unaudited) (Audited) 45,700 39,400 (14,700) 6,300
	31,000 45,700

There were no transfers between Level 1 and Level 2 in the six months ended 30 June 2014 and year ended 31 December 2013.

Fair value measurements and valuation processes

The board of directors of the Company has set up a team, which is headed up by the Chief Financial Officer of the Company, to determine the appropriate valuation techniques and inputs for fair value measurements. In estimating the fair value of the financial assets and liabilities of the Group, the Group uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Group engages third party qualified valuers to perform the valuation. The team works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model. The Chief Financial Officer reports the valuation findings to the board of directors of the Company regularly to explain the cause of fluctuations in the fair value of the related financial assets and liabilities.

Information about the valuation techniques and inputs used in determining the fair value of the financial assets and liabilities are disclosed above.

60 Comtec Solar Systems Group Limited

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

23. CAPITAL COMMITMENTS

Capital expenditure in respect of the acquisition of property, plant and equipment — Contracted for but not provided in the condensed consolidated financial statements — Authorised but not contracted for PLEDGE OF ASSETS Prepaid lease payments Property, plant and equipment Pledged bank deposits	30 June 2014 31 December 2013 RMB’000 RMB’000 (Unaudited) (Audited) 25,683 119,585 200,000 –
	225,683 119,585
	30 June 2014 31 December 2013 RMB’000 RMB’000 (Unaudited) (Audited) 14,080 14,242 85,266 87,727 170,968 1,019
	270,314 102,988

24. PLEDGE OF ASSETS

Interim Report 2014 61

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2014

25. RELATED PARTY TRANSACTIONS

The remuneration of directors and other members of key management personnel during the period were as follows:

Basic salaries and allowances Retirement benefit scheme contributions Share-based payments	Six months ended 30 June 2014 2013 RMB’000 RMB’000 (Unaudited) (Unaudited) 2,614 2,189 78 78 4,842 1,314
	7,534 3,581

The remuneration of directors and key management personnel is determined by the remuneration committee of the Company having regard to the performance of the individuals and market trends.

62 Comtec Solar Systems Group Limited

Definitions

In this report, unless the context otherwise requires, the following terms shall have the following meanings:

“Board” or “Board of Directors”	the board of Directors
“Company”	Comtec Solar Systems Group Limited
“Corporate Governance Code”	Code on corporate governance practices contained in Appendix 14 to the
	Listing Rules
“Directors(s)”	the director(s) of the Company
“Euro”	the lawful currency of the eurozone
“Fonty”	Fonty Holdings Limited
“Group”	the Company and its subsidiaries
“HKD” or “HK$” and “HK cent(s)”	Hong Kong dollars and cents respectively, the lawful currency of Hong
	Kong
“Hong Kong”	The Hong Kong Special Administrative Region of the PRC
“Listing Date”	the date on which dealing in the Shares first commences on the main
	board of the Stock Exchange
“Listing Rules”	The Rules Governing the Listing of Securities on the Hong Kong Stock
	Exchange
“Model Code”	Model code for Securities Transactions by Directors of Listed Issuers
	contained in Appendix 10 to the Listing Rules
“MW”	megawatt, which equals 106Watt
“Period”	the six months ended 30 June 2014

Interim Report 2014 63

Definitions

“Photovoltaic” or “PV” the field of technology and research related to the application of solar cells for energy by converting solar energy (sunlight, including ultra violet radiation) directly into electricity (solar electricity) “PRC” or “China” The People’s Republic of China “RMB” Renminbi, the lawful currency of the PRC “Share(s)” Ordinary share(s) of HK$0.001 each in the share capital of the Company “Shareholder(s)” Shareholder(s) of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “USD” United States dollars, the lawful currency of the United States of America “%” per cent

64 Comtec Solar Systems Group Limited